HMRC Cracks Down on ‘Dodgy Shops’

HMRC has announced a major crackdown on businesses suspected of tax fraud, money laundering and other illegal activity, with more than 30,000 compliance interventions planned during 2026/27. The initiative is designed to protect honest businesses and disrupt criminal networks operating through apparently legitimate high street premises.

Who is being targeted?

HMRC has indicated that its campaign will focus on sectors it believes may be at greater risk of non-compliance, including:

• Vape shops
• Barbers
• Convenience stores
• Souvenir shops
• Candy stores

According to HMRC, some businesses within these sectors are being used as fronts for tax evasion, labour exploitation and money laundering activities.

What action can HMRC take?

The planned interventions may include:

• Unannounced visits to business premises
• Tax compliance enquiries
• Organised crime investigations
• Seizure of goods
• Warning letters and follow-up enforcement action

These checks are intended to identify businesses that are failing to meet their tax obligations and to tackle wider criminal activity where necessary.

Recent enforcement activity

HMRC recently worked alongside Immigration Enforcement, Trading Standards and the Metropolitan Police during visits to six souvenir shops in central London.

The operation resulted in:

• Tax investigations being opened
• Immigration-related arrests
• Seizure of counterfeit and unsafe goods
• A £40,000 civil penalty for employing an illegal worker

The exercise demonstrates the increasingly joined-up approach being taken by government agencies when investigating suspected non-compliance.

Increased focus on till fraud

A particular area of concern for HMRC is “till fraud”, where electronic sales records are manipulated to conceal income and reduce tax liabilities.

Electronic sales suppression tools can be used to alter or remove transactions from accounting records, resulting in sales being omitted from VAT returns and tax calculations. HMRC has confirmed that it intends to pursue both the suppliers and users of these systems.

What does this mean for legitimate businesses?

While the campaign is aimed at tackling deliberate non-compliance, it serves as a reminder that all businesses should ensure their records and systems are accurate and up to date.

Business owners should regularly review:

• Bookkeeping records
• Till and EPOS systems
• VAT returns
• Payroll records
• Staff right-to-work procedures
• Internal financial controls

Maintaining accurate records and carrying out periodic reviews can help identify errors before they develop into more significant compliance issues.

How James Todd & Co can help

With HMRC increasing its compliance activity, now is a good time for businesses to review their financial systems and record-keeping procedures.

Our team can help by:

• Reviewing bookkeeping and accounting records
• Carrying out VAT health checks
• Assessing payroll compliance procedures
• Identifying weaknesses in financial controls
• Advising on record-keeping requirements
• Supporting businesses during HMRC enquiries and compliance checks

Whether you use cloud accounting software, EPOS systems or manual records, regular reviews can help reduce risk and provide reassurance that your business remains compliant.

Source: HMRC press release, 12 June 2026, “Tax Minister to owners of dodgy shops: We are coming for you”.